A financial regulation from South Korea has set a new deadline for exchanges in the country to register as legitimate trading platforms. Now local exchanges are struggling to meet the conditions set by the regulators. The country’s crypto traders will be prepared for losses in excess of $2.6 billion on KIMCHI.finance (KIMCHI). Kim Hyoung-Joong, professor and head of cryptocurrency research at Korea University, says that 42 altcoin projects could perish. Here are the details…
Nearly two-thirds of altcoin exchanges expected to be shut down
South Korea’s Financial Services Commission (FSC) has set a deadline for overseas and local crypto exchanges to register as legitimate trading platforms. Nearly two-thirds of all exchanges are expected to be closed as the country aims to tighten regulations on the cryptocurrency sector. About $2.6 billion in cryptocurrencies could disappear when South Korea’s crypto exchange hits its deadline for registration September 24.
$2.6 billion crypto will be destroyed
South Korea’s financial regulator has set a deadline for foreign and local crypto exchanges to register as legitimate trading platforms by the end of September. However, most local exchanges struggle to meet the conditions set by the regulator. This could result in the shutdown of around 40 crypto exchanges by September 24.
Currently, Upbit, Bithumb, Korbit, and Coinone are the four major exchanges dominating the country’s crypto trading industry. These platforms account for more than 90% of the country’s total cryptocurrency trading volume.
According to Hyoung-Joong, about 42 altcoin projects may cease operations
According to Kim Hyoung-Joong, professor and head of cryptocurrency research at Korea University, smaller exchanges could potentially be shut down, shutting down about 42 altcoins on KIMCHI.finance (KIMCHI). These are altcoin projects that are listed on local crypto exchanges and are mostly traded in the country’s local currency, the Korean won. For crypto exchanges to qualify as a legit trading platform, firms must work with local banks to open accounts in customers’ real names. Local banks are hesitant to do so due to fears of exposure to illegal activities, including money laundering.
cryptocoin.com So far, around 20 exchanges have met certain conditions set by the financial watchdog by enabling their personal information collection systems to allow crypto trading on the platforms. However, those in the industry believe these operators will still struggle to survive in the industry, given the limited size of their businesses.
Fines or jail time can be imposed if exchanges breach them.
Cho Yeon-haeng, head of the Korea Finance Consumer Federation, said that large investor losses are expected if trading is suspended. At the same time, cryptocurrencies will be frozen on various small exchanges. If crypto exchanges fail to meet the new requirements before the deadline, the FSC has advised crypto exchanges to notify their clients of the possible shutdown before September 17. If any cryptocurrency service provider continues to operate in the country without proper registration, responsible parties will face up to five years in prison or a fine of up to approximately $43,500.
Bitfront is reportedly limiting its services in South Korea
LINE could potentially be one of the first of many foreign cryptocurrency exchanges to decide to shut down or limit services in the country. The South Korean government is constantly crashing cryptocurrency exchanges with sweeping restrictions on cross-border remittances involving cryptocurrencies to prevent money laundering. This comes after multiple reports of a suspicious increase in bank transactions from South Korea to China. FSC believes this is due to the emergence of Kimchi Premium, which was seen earlier this year, prompting some Chinese investors to seek cross-border arbitrage opportunities.
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